City broker faces new allegations
Investment watchdog alleges her assistants doctored documents
By Barbara Shecter and Andrew A. Duffy, Times Colonist; Canwest News Service July 31, 2009
The Investment Industry Regulatory Organization of Canada yesterday alleged, among other things, that Carolann Steinhoff's assistants pasted old or photocopied signatures onto client documents, and used whiteout fluid to change instructions on documents while leaving the signatures intact.
Altered forms were alleged to have been sent by fax to Wellington's head office "as properly executed documents."
According to Wellington West, Steinhoff resigned from the firm at the end of June.
This fascinating in-depth 2005 article from Canadian Business outlines details of the previous allegations about this enigmatic character.
Yesterday, IIROC alleged that Steinhoff attempted to frustrate or obstruct the latest regulatory probe, as well as an internal investigation by Wellington West. She is accused of not responding truthfully or completely to questions about documents that were allegedly falsified in March of 2007, and also of altering a courier delivery receipt to corroborate her statements and counselling or encouraging one of her assistants "to make evasive or misleading statements" to investigators.
On Dec. 17, 1998, a dark cloud formed over Steinhoff. According to ScotiaMcLeod, she received a memo from her superiors alleging that she may have engaged in discretionary trading. It was a serious allegation. If a client wants his broker to trade on his behalf, he must apply in writing for what's known as a "discretionary" account. The application must be approved in writing by a senior brokerage official. Otherwise, before executing a transaction, brokers must obtain client instructions on the security to be traded, at what price, in what quantity, and the timing of the order. Failure to do so could be construed as discretionary trading, an offence most brokerages consider grounds for termination.
After she returned to work about a week later, she received a letter, dated April 30, from James Werry, a ScotiaMcLeod managing director and head of brokerage. It informed her she would be placed under "close supervision" for one month due to client complaints about discretionary trading. That meant her superiors would review and sign off on every trade she executed. The letter further warned that Steinhoff could be fired "for cause without further notice or warning" for future transgressions. "This is a serious matter and it must be dealt with by you in that fashion," Werry stated. (Ironically, nearly two weeks later, he sent a warm congratulatory letter to Steinhoff for winning the company's 1998-99 RRSP campaign and awarded her a $1,000 marketing allowance.)